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Finnair management “sees potential” in possible SAS merger
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June 24th, 2013
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This article is more than 11 years old.
SAS shares flying high after expectations that merger with Finnish flag carrier could take off where similar deals have fallen to the ground
Renewed attempts at a merger between SAS and Finnair to create a joint Nordic airline is being given good chances of succeeding by both experts and the managemenet of the two companies.
Finnair's interest in such a deal were confirmed this morning by Finnair managing director Pekka Vauramo.
“I see potential in a merger,” Vauramo told Denmark's Børsen newpaper. “Our largest shareholder is thinking along those lines.”
The largest shareholder of Finnair is the Finnish state, which holds a 57 percent stake in the airline. SAS, likewise, is majority owned by the Danish, Swedish and Norwegian states.
This is not the first time the two companies have discussed a merger, but the ongoing financial problems at both companies and increasing competition from upstart Norwegian airlines has SAS corporate heads in Sweden and Norway seriously considering the move, so the Danish division will have no choice but to get onboard.
SAS chairman Fritz Schur, who is a Dane, is on record as supporting the idea of a merger.
Rumours of a possible union between the two companies is good news for investors. The price for SAS shares shot up nearly nine percent in early trading this morning and Finnair shares increased marginally as well.
Financial advisors are afraid that the euphoria might well be a case of too much too soon.
“The idea is captivating, but it is hard to see anything really happening in the short term,” Sydbank aviation industry analyst Jacob Petersen told Berlingske newspaper.
Petersen, however, did agree that a merger between the two airlines would make sense.
“Finnair does not have enough volume on its short routes, but do very well on their flights to Asia,” he said. “Joining together would create a strong company with a network that could cover the entire Nordic market.”
Pedersen said “bad timing” has been the major culprit in derailing earlier merger talks.
“When one company was doing well, the other has been in trouble,” he said.
Both companies have come under financial pressure recently, so the time may be ripe for a merger.
Pedersen said that while it made sense for the two airlines to merge, nothing was likely to happen until both companies completed ongoing austerity programmes.
“Any merger that derails SAS’s savings plans could have fatal consequences,” he said.
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